Hoarding

I can understand fiscal prudence. I cannot understand, however, why this administration is so obsessively hoarding the cash.

One lawmaker, the other day, placed the blame for the misery endured by two million people in Central Luzon squarely on the President’s feet. It turns out President Aquino vetoed an item in the budget that might have allowed government agencies to begin working on disaster-mitigation programs long before calamity struck.

The President’s veto message basically said that all of the calamity fund should be kept intact until there is an actual calamity. But when calamity strikes, it is often too late for government agencies to mitigate its adverse consequences.

It should be mentioned that the present calamity fund is significantly larger than the previous administration had. Only the Office of the President can release money from this fund.

We have not been told how much money has been released from the calamity fund since the twin typhoons “Pedring” and “Quiel” struck. The DSWD appraises us with its daily count of relief bags packed and delivered to the dislocated. That number, however, seems paltry considering the estimated 2 million people dislocated.

Local government officials in Benguet and Ifugao are complaining that not a pound of relief has come their way. Many mountain communities in the two provinces are cut off by landslides or swept away by flash flooding.

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The clergy of Pampanga are begging the President to set politics aside and deliver assistance to the flooded towns of this province. I am not sure if their pleading merited a response from the Palace.

While the water is receding in Central Luzon, most of the towns in Maguindanao apparently remain flooded. Media attention to their plight has been scarce — and so, it appears, has national government attention.

The President, understandably, is not particularly fond of Pampanga or Maguindanao. That, however, must not be a factor in the national government’s response to the calamity.

Congressmen belonging to the minority bloc are also pleading for their pork barrel allotments to be released so that they might be deployed immediately to the distressed communities in their districts. The situation in those communities might be dire; but the Palace appears to be in no hurry to assist its critics.

The administration’s handling of the human tragedy that befell us has been described as “insensitive.” Maybe also “diffident”?

Understanding

The stinginess of the Palace response to the large-scale calamity that hit the country last week is not an isolated instance. It falls into the general pattern of underspending that characterized the administration’s handling of government affairs since it took over.

Last week, before the typhoons consumed our attention, employees of the judiciary quietly protested the Palace plan to impound funds allocated for positions currently vacant and hold it in a special item from which money can only be drawn on approval of the Palace. That plan will make it more difficult for the judiciary to address the massive shortages of judges. It also violates the fiscal autonomy the judicial branch should enjoy as a co-equal branch of government.

The tension growing between the judicial and executive branches is rooted in Malacanang’s obsessive hoarding of public funds. This the same source of tension between the executive and legislative branches.

One lawmaker very publicly speculated that the Palace is hoarding the funds so that it can orchestrate releases for maximum political benefit in time for the 2013 elections. Hurried fund releases, such as the Budget Secretary promises for the fourth quarter of this year, has its own inherent perils. The spending could be haphazard and leakages high. The impact on macroeconomic performance will be suboptimal, like taking all of your vitamins for the week all in one day.

Over the past few days, all the international financial institutions and all the major global investment banks trimmed growth forecasts for the Philippines this year and next. No one is really taking seriously our official (albeit downgraded) growth target of 5% or better. The international banks are looking at 4% or maybe less.

All the banking forecasts note the general weakness of the global economy, given the unresolved Euro debt crisis. All of them, likewise, take government to task for failing to spend promptly enough to stimulate domestic economic activity.

Of all the Southeast Asian countries, the Philippines has the lowest investment ratio. To a large extent, this is due to the failure to sustain public investments, particularly in infrastructure.

The poor investment ratio will hobble our economic growth long into the future. Sadly, there does not seem to be a program to improve our performance on this key aspect of national economic wellbeing.

We were initially made expectant by the Aquino government’s announcement of public-private partnerships (PPP) to drive our economic growth. When not one project has materialized to date (and after the director of the office in charge of this decided to study abroad instead), we have lately been told that our economic investments will be funded by official development assistance (ODA).

But where will the ODA come from? We have antagonized the Germans because of the Fraport affair, the Belgians because of the sudden cancellation of the Laguna Bay dredging project they financed, and the French because we decided to cancel the contract to build urgently needed ro-ro ports.

Our growth will need to be driven by larger scale financing, way beyond what available ODA there might be. Government, too, will at some point have to spend the money it now hoards for no sound economic reason.